Why the new world of sustainability leadership lies in products
EXCLUSIVE: Companies that are tackling key environmental and societal issues through they way they design, make and sell products will become the leaders of the low-carbon economy, as customer-facing begin to diversify their services in favour of sustainable business.
That is the view of Kingfisher’s former director of sustainability and innovation Dax Lovegrove, who believes that a number of big businesses are beginning to make “dramatic interventions” in their business models; moving sustainability agendas away from the “easy wins” of in-house efficiency towards “outward-focused products” that have more positive social and environmental impacts.
Speaking exclusively to edie ahead of this month’s edie Live exhibition (scroll down for details), Lovegrove – now an Earthwatch trustee and advisor for O2’s Think Big social action project – claimed that the recent global exposure to sustainability and climate action, caused by the Sustainable Development Goals and the recent Paris Agreement, have paved the way for the transition to a new low-carbon economy, driven by the private sector. And the key to accelerating that low-carbon transition lies in products.
“[The SDGs and the Paris Agreement] are useful in accelerating significant change across the private sector,” Lovegrove said. “In the wake of COP21, I think it’s interesting to see that companies are not just managing their carbon footprint, but are starting to help customers manage theirs as well, which can drive much more exponential savings.
“Products will define the future of sustainable leaders, as long as these products aren’t just driving an efficiency agenda. Many companies are selling eco-products, which are useful to help customers save a bit more energy and water, but I think that more dramatic interventions will help drive the low-carbon economy.”
The power of products
Lovegrove, who left DIY retailer Kingfisher in February, highlighted Ikea’s recent decision to sell residential solar photovoltaics to customers as a prime example of how companies are beginning to move away from “business-centric models” that focus on lowering in-house emissions towards new operational plans that cater for global markets.
As part of this shift, Lovegrove also believes businesses that embrace new green technologies and innovative business models – such as battery storage and the sharing economy – will be ahead of the pack and ready to operate in a low-carbon economy; but only if they are occasionally “prepared to fail” along the journey.
“When you look at the new technologies which are coming – like battery storage – it will be interesting to see who the next big retailer will be to step up and tap into this technology,” Lovegrove said. “Companies that will succeed in the long-term will accept that failure is part of the journey and, when you fail, you learn.
“This failure will help in the long-term. It allows you to adopt concepts like circular or sharing economies as a successful model, but you’ll need to experiment and inevitably fail before you reach long-term success.”
And the shift to these more sustainable business models is already beginnign to take shape. Lovegrove pointed to the automotive market’s growing willingness to embrace new electric-based models – as well as branching out into servitisation and on-demand car use – as a sign of how companies are now offering products that tackle societal issues.
A similar point was made late last month by Lovegrove’s former Kingfisher colleague, Richard Gillies – who has also now left the firm. Speaking at an edie Leaders Club breakfast briefing in London, Gillies pointed to the recent record-breaking sales for Tesla’s Model 3 electric car as proof that consumers are clearly concerned about the environmental impact of fuel sources.
“How can Tesla sell $12bn-worth of cars, that nobody has ever seen, in 10 days?” Gillies said. “That is the new world of sustainability we are now entering – if you want to be a sustainability leader, you need to be thinking about changing your industry through the products and services you sell.”
Away from the automotive industry, Lovegrove mentioned how consumers are increasingly being treated to societal-enhancing products across both the food and fashion sectors. The emergence of “ethical fashion” – which Lovegrove says is being championed by H&M – has accelerated the growth of circular economy models within the clothing industry, while the likes of Ikea, Pret a Manger and Sodexo have all been introducing food products that address societal concerns surrounding meat consumption.
But an industry-wide transition to sustainable business is not happening fast enough. “In the business world, there’s still quite a company-centric view on sustainability which is fine for good housekeeping,” Lovegrove added. “But there is a more outward-looking approach to encourage, and I think the future of sustainability is where companies start to look at big societal challenges that are relevant to them and how they can attack these challenges to promote business values. These companies are already leading the way with this.”
Lovegrove is urging more businesses to focus on sustainability ‘megatrends’ as a way to prepare for the low-carbon transition. While companies should already be aware of concepts which are rapidly gaining traction, such as the Internet of Things, ever-changing global dynamics such as an aging population will also need to be accounted for.
“Companies will need to scan for megatrends which they think are the most relevant,” Lovegrove added. “In terms of an aging population, you need to think of how to make use of a diverse workforce and engage the older generation, while also adapting products and services to cater for older people.”
Dax Lovegrove at edie Live
Dax Lovegrove will be speaking on the edie Leaders Theatre at edie Live in May, discussing how ambitious thinking can incentivise change, alongside associates from Corillian and ADE.
If you manage your company’s energy, sustainability, environmental or corporate responsibility, then two days at edie Live will give you a free pass to all the learning, peer-to-peer networking, innovative suppliers and inspiration you need to drive sustainability through your organisation.